- As seen by the Bitcoin futures premium hitting a five-week high, the bull market for the cryptocurrency is fully underway.
On July 22, the price of Bitcoin (BTC) tickers down $66,860 reached an intraday peak of $68,518—its highest level in forty days. The 19.4% increases in ten days were driven by investors’ growing confidence that the US Federal Reserve will lower interest rates in 2024, the German government’s decision to stop trading Bitcoin, and a more positive regulatory outlook, particularly in the US.
The major indicator of professional traders’ attitude, the Bitcoin futures premium, surged to its highest level in five weeks due to the bullish momentum. Traders are now wondering if the circumstances support a rise to $72,000 in spite of the unpredictability surrounding the US presidential election and the unrest in global society and politics.
The election of President Biden has little bearing on the price of Bitcoin
The decision by President Biden to withdraw from his reelection campaign on July 21 raised the chances that former President Donald Trump and his crypto-friendly candidate for Vice President, JD Vance, would prevail in the forthcoming election. Voting in favor of a joint resolution to repeal a regulation that sought to designate cryptocurrency assets as a liability on banks’ balance sheets, Vance had previously revealed ownership of up to $250,000 in Bitcoin.
No matter how pro-crypto a prospective Trump cabinet member may be in 2025, investors also recognize the independence of the US Securities and Exchange Commission (SEC) and US Federal Reserve (Fed). Gary Gensler, the current Chair of the SEC, has a five-year mandate that expires in April 2026; Fed Chair Jerome Powell’s second term is scheduled to finish in May 2026.
Investor confidence in the Fed’s decision to maintain interest rates at 5.25% on July 31 is strong, but year-end forecasts have significantly shifted. Using US Treasury yield pricing models, the CME FedWatch tool indicates that the market is currently pricing in 47% probabilities of two interest rate reduction by the meeting on December 18, up from 20.5% one month ago.
As per Bloomberg, investors were dissatisfied with the regime’s lack of pronouncements regarding short-term economic stimulation, which has left China, the second largest economy globally, with uncertainty. On July 22, the People’s Bank of China reduced the seven-day reverse repo rate from 1.8% to 1.7% for the first time in a year. The decision was reportedly considered “reactive” and a “risk” to Morgan Stanley economists’ growth projections for the area.
Bitcoin derivatives indicate a potential price of $72,000
An analysis of the premium for the monthly Bitcoin futures contract would help one comprehend how these conditions affected the risk appetite of Bitcoin investors. Unlike everlasting futures (inverse swaps), the price of these products typically varies dramatically from regular spot Bitcoin transactions. Usually, a premium ranging from 5% to 10% is anticipated to offset the extended settlement duration.
On July 22, the premium for Bitcoin futures reached 13%, the biggest level in the previous five weeks. Despite being below the June 7 level of 16%, the current premium suggests a cautious optimism. This is essential to prevent unanticipated unfavorable price movements from causing cascading liquidations.
The 25% delta skew of the Bitcoin options indicates the relative demand for call (buy) and put (sell) options. This skew can be used to assess if this emotion is unique to the futures markets. Call options are more in demand when there is a negative skew, while neutral markets usually have a delta skew of between -7% and +7%, which suggests equal pricing for the two instruments.
Since July 19, the 25% delta skew statistic for bitcoin has not moved from its stable near–9% level, indicating that traders are rather bullish about near-term price changes. Similar indicators of optimism were recently seen in Bitcoin options on May 20, although this period of time was brief due to the difficulty in breaking above the $71,500 resistance.
According to the most recent data, there is a strong Bitcoin bull market that is headed toward a retest of the $72,000 milestone. A number of variables, such as geopolitical unpredictability, faith in less stringent central bank economic policies, and a more positive outlook on cryptocurrency regulation following the SEC’s withdrawal of significant cases and investigations, are driving demand.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
